Aussie stocks close stronger

SYDNEY - The Australian share market closed stronger on Tuesday but well off its early highs after the central bank decided to raise the key cash rate.

The benchmark S&P/ASX200 index closed up 18.3 points, or 0.4 per cent, at 4591.6 points, while the broader All Ordinaries index gained 17.9 points, or 0.39 per cent, to 4597.2 points.

On the Sydney Futures Exchange at 1615 AEDT, the December share price index contract was 24 points higher at 4607 points on a volume of 26,846 contracts.

The Reserve Bank of Australia (RBA) announced an increase of a quarter of a percentage point in the interbank overnight cash rate.

The cash rate will rise to 3.25 per cent from 3.00 per cent, where it has been since a series of cuts ended in April this year.

IG Markets research analyst Ben Potter said the market lost early gains that had been fuelled by a stronger Wall Street and commodities markets, as the RBA's decision on interest rates loomed.

However, the rate rise was not expected to have a lasting effect on shares.

"One would not expect too much of a reaction from equities markets from the RBA's decision," Mr Potter said.

"While the timing of today's rate hike may have surprised some investors, markets had undoubtedly baked in the possibility of one or two upwards moves before Christmas and may actually see today's hike as confirmation of the underlying strength and resilience of the Australian economy."

The big four banks ended mixed. ANZ added 20 cents to $23.30, Westpac gained 51 cents to $25.18, National Australia Bank lost 11 cents to $29.09 and Commonwealth Bank fell 18 cents to $49.50.

Property companies ended mostly lower, although Westfield gained 24 cents to $13.30.

Stockland dropped four cents to $3.83, Mirvac lost 1.5 cents to $1.565 and GPT Group fell 0.5 cents to 63 cents.

The major resources stocks ended higher due to stronger commodities prices in overnight trade.

BHP Billiton added 33 cents to $36.65 and Rio Tinto gained 88 cents to $57.73.

Fortescue Metals was one of the worst performers, shedding 19 cents, or 5.29 per cent, to $3.40.

Energy stocks were mixed after New York's benchmark crude oil price rose.

Oil Search added 10 cents to $6.31, Santos edged up 13 cents to $15.07 and Woodside dropped 43 cents to $50.90.

The spot price of gold in Sydney was US$1018.70 per fine ounce, up US$14.43 on Monday's closing price of US$1004.27.

Gold stocks advanced, with Lihir up eight cents to $2.97, Newcrest Mining up 76 cents to $32.93 and Newmont lifted 10 cents to $4.96.

Making news, Grains handler and marketer GrainCorp said its $757 million acquisition of the world's fourth largest commercial malt manufacturer, United Malt Holdings), will transform the company.

Graincorp shares are in a trading halt at $8.39.

Brambles announced chief executive Mike Ihlein would retire on November 1 and be replaced by internal appointee Tom Gorman.

It also unveiled changes to its US pallet business that will cost US$260 million (A$296.3 million) over the next three years.

Brambles shares lost 20 cents, or 2.61 per cent, to $7.45.

David Jones lost 30 cents to $5.54 as its rival Myer opened the retail component of its initial public offer (IPO) following what it described as strong demand for the stock from brokers.

Among other retailers, Woolworths added nine cents to $29.17, Coles owner Wesfarmers gained 19 cents to $25.74, Harvey Norman dropped 11 cents to $4.13 and JB Hi-Fi lost 10 cents to $18.76.

Telstra shares were flat at $3.24 while rival Optus owner Singapore Telecommunications gained two cents to $2.63.

The most traded stock by volume was Norwest Energy with 123.83 million shares worth $4.87 million changing hands.

Its shares added one cent, or 30.3 per cent, to 4.3 cents.

Preliminary market turnover was 2.52 billion shares worth $4.29 billion, with 591 stocks up, 480 down and 335 steady.

- AAP